Has the summer rally past us by before we even noticed? The start of August came out with a bang, the S&P 500 (SPX) trading for the first time ever over 1700. It’s been a remarkable run for about four years now, but perhaps things are just getting warmed up.
August is known to be a dreadful month for the markets. Not only are there no holidays but we have vacations, light trading and the weather (extreme heat makes one lazy and the brains fried). So, as always we could use a good strategy to get through the summer doldrums.
While we are used to some sort of rallying in the summer, if you look at July you’ll notice a robust move, the SPX 500 was higher by nearly 5% – the best month in a long while, yet nobody really notice.
BUY THE DIPS
So, where do we go? I suspect trying to get long/bullish at an all time high is not prudent. However, the dips have been few/far between this year, but there have been opportunities. I would suggest waiting for these dips again to occur, they are short, painful and seem treacherous – but aren’t they all like that? This seems to be the year of ‘buy the dip,’ so when we see it come let’s be prepared. In the meantime, any market rallies like yesterday should be taken to sell any existing longs.
TAKE YOUR PROFITS
Let’s face it, nobody will tell you when to sell – nor should they! Automatically part of your trading process, selling is the most liberating experience. This game is about profits, and when you have them you take them – live to fight another day!
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Bob Lang has a newly re-launched website at www.explosiveoptions.net, where he manages subscribers, writes a newsletter, hosts webinars and has just opened a brand new chat room.
